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Although we disagree with the idea that "the tape tells all," it is important for all traders to stay on top of key technical happenings on the charts. Below is our current "executive summary" take on the State of the Tape.
Technical Talk: March 19, 2010
The Trend and Momentum Indicators:
Short-Term Trend: The indices have moved a little too far away from their 10-day moving averages, so a pullback/pause will give our trend oriented indicators a chance to catch up and become useful again.
Intermediate-Term Trend: This morning's pullback doesn't change much from an intermediate-term perspective. The weekly chart still sports a breakout, which remains a good thing.
Market Internals: Assuming today's pullback continues, our TBC models are likely to weaken a bit. Our shorter-term "hair trigger" model is likely to move down into the neutral zone which has meant that while stocks have historically continued to gain ground, the rate of advance has tended to slow down.
- TBC = Trend-and-Breadth-Confirm Models
Market Momentum: Our momentum models have weakened a little this morning but remain positive on balance.
Support/Resistance Zones for S&P 500:
- Current Support: 1150ish
- Current Resistance: 1200
The Early Warning Indicators:
Overbought/Oversold Condition: Stocks remain overbought from a short-term perspective. However, a couple days worth of selling or sloppy action would work off this condition.
Investor Sentiment: No change here… Our sentiment indicators have finally flipped to negative on balance and there is no denying that sentiment is now approaching "frothy."
Current Strategy:
It would appear that the much-anticipated pullback/consolidation has begun. From a technical perspective, all eyes will be on the 1150 area on the S&P 500 as "old resistance, becomes new support." Any meaningful break below 1150 would suggest that the future of the uptrend is in question and a close below 1140 would serve as confirmation. However, as we've been saying, the strength of the move to the upside has been impressive, so we are inclined to give the bulls some room here.
We'd be Short-term Buyers At: A successful retest of 1140 - 1150 on S&P 500
We'd be Short-term Sellers At: Close below 1134 on S&P 500
S&P 500:
NASDAQ Composite
The indicators we have displayed on the chart above include: 50 day exponential ma (purple), 25 day exponential ma (cyan), 10 day weighted ma offset by 2 days (orange), standard deviation bands using 1.9 std dev of 21 day and stochastic %K using 14 and %D.
S&P 500 Intraday
S&P 500 Last 3 months
S&P 500 Last 12 months
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